How will article 50 affect the UK promotional merchandise industry?
BPMA director general, Gordon Glenister, assesses its impact
On the 29th March, Theresa May had the UK government’s mandate to trigger article 50 to leave the European Union. So how will it affect the UK promotional industry? The short answer is that it’s still too early to tell.
This country has experience in dealing with challenging times, and often will defy the experts. Certainly, some were expecting Armageddon after the referendum result, but it didn’t materialise. Some large companies are planning for the impact and considering having small satellite offices in Europe, but there doesn’t appear to be a widespread exodus yet.
One of the biggest challenges will be a volatile currency which may make it difficult to plan and predict. This might be a good time to buy forward currency to at least protect pricing and profit. There is a huge amount to negotiate and the UK government is trying to get a good deal. Meanwhile theEuropeans don’t want to make it look like a deal is better for those outside as this may cause contagion and others will look to follow.
It’s also not in the UK’s interest to have a weakened EU. Top of the list will be the status of EU and British nationals. There are a number of UK businesses that employ staff from the European Union, and some of them have clearly expressed concern hence the reason why this is so important. I would have thought all existing residents will be OK, but there will be a future date set where border controls may be in place.
A lot of imported goods flow quickly and efficiently through our borders. Clearly if every cargo was checked, this would create enormous delays for both imported and exported goods, particularly if we were forced to move our border from France to the UK. If there are tariffs imposed, technology is advancing so quickly that I am sure this problem would be overcome. I also think some of the major industries of pharmaceutical, finance and automotive will have separate agreements.
The biggest worry would be if there was a loss of consumer confidence, which in turn affected marketing spend. This hasn’t happened yet, in fact Brand UK has never been in a better place -the ‘Made in the UK’ kitemark has great respect the world over.
In fact, it might be that British made promotional goods grow further.A weaker pound has made many UK goods much more competitive, a view that came out in conversations from European distributors at the PSI show in January.
Examples of Volatilty GBR/EUR 6 month
- High 1.1944; low1.1054
- 7.73% volatilty
- When buying euros with £500,000 this translated to a difference of €44,500 between the six month high and low.
Market Movements GBP/USD 6 month
- High 1.3385; low1.2049
- 10.5% volatilty
- When buying euros with £500,000 this translated to a difference of €66,800 between the six month high and low.